You may not have noticed that the NHL hasn’t started its season yet, which is arguably Problem #1 for the wannabe major league: Ice hockey is fourth in a three-horse race of pro team sports vying for the affection of casual U.S. fans. Problem #1A is the lockout of players that’s been in force since Sept. 15, which has resulted in the cancellation of nearly 550 regular-season games to date. But in the event you are following the inaction rinkside, don’t be fooled when league officials or anyone else claims that the main issue is greedy players. The real problem in hockey is not in the locker room, but in the owners’ suites and commissioner’s office.

The NHL would like you to believe that owners give too much money to players. That was management’s position almost a decade ago—the last time the league locked out its talent—when players were getting three-quarters of total revenues. After an entire season was voided, the NHL Players Association caved, agreeing to lower its members’ share of revenue to 57%. Peace and harmony have ensued since, but now the owners want an even bigger piece of the pie, claiming financial hardship.

Don’t believe them, not for a minute. First, as I’ve written about before, sports team accounting is misleading at best, given that club owners can claim to be losing money when a) the losses are on paper only; b) there are tax benefits from whatever losses happen to be real; and c) the value of their teams continue to rise.

All this is true for NHL owners as a group. The average NHL team, according to Forbes, is worth $282 million, an 18% increase from one year ago. It’s true, certainly, that sky-high values for a handful of mega-successful teams (Toronto Maple Leafs, $1 billion; New York Rangers, $750 million; Montreal Canadiens, $575 million; Chicago Blackhawks, $350 million; Boston Bruins, $348 million) raise the overall average, while some struggling teams (Carolina Hurricanes, $162 million; New York Islanders, $155 million; Columbus Blue Jackets, $145 million; Phoenix Coyotes, $134 million; St. Louis Blues, $130 million) are worth much less. But it’s also true that $282 million is higher than the price tag Forbes placed on the most valuable teamin the league just a decade ago (Rangers, $277 million). And the average value for the bottom five teams today ($145 million) is nonetheless higher than the price tag for fully half the league’s team in 2002. Few teams have struggled financially in the past decade as much as the Coyotes, for example, and yet their valuation over the past decade has increased 69% ($79 million to $134 million).

None of which is meant to say that the NHL doesn’t need tweaking. It does, in two ways. First, there’s a strong argument to be made that there are too many NHL teams, or at least too many in places where ice hockey is not exactly a native sport. i.e., the American South. This is the fault of NHL commissioner Gary Bettman, long a champion of NHL expansion. But hockey in the U.S. is not a national sport; it’s a collection of regional enthusiasms, and not enough fans in the American Southwest and Southeast are as enthusiastic about hockey as they are about football, baseball, and basketball. Is it any wonder that the Atlanta Thrashers’ fortunes improved after they relocated to Winnipeg last year (changing their name to the Jets)? With a rabid regional fan base, management could raise ticket prices and secure a more lucrative local TV deal. Forbes has the franchise’s value increasing by a fifth in just a year (to $200 million). Alas, there aren’t that many large markets without an NHL franchise left north of the border, or in the northern U.S. Likewise, contraction isn’t a likely prospect. Major (or even minor major) sports leagues reduce their ranks of teams about as often as owners speak honestly about their finances.

More to the point, contraction might not be necessary if NHL owners would only grow up. The problem in hockey, as ESPN The Magazine‘s Peter Keating recently explained, is that NHL owners don’t share enough of their own money with each other. And share they must, because the nature of the NHL’s “popularity” in the U.S.—intense interest among small pockets of local fans, consistent disinterest otherwise—translates into paltry national TV contracts. As a result, Keating writes, NHL teams “share a far tinier proportion of their revenues than teams in other sports do, because NHL clubs rely much more on local media deals for money than on national TV contracts.” So big-market teams, with lots of local TV money, spend more on player salaries, forcing small-market owners to choose between paying their players more than they can afford or putting a subpar product on the ice. Either choice has unpleasant financial consequences.

This has long been a problem, of course, for all major sport leagues. But we’ve known for a while that the way mature owners and strong commissioners have to deal with this imbalance is to share revenues between teams. Practically, this allows all teams to be competitive, ensuring a consistent and popular product. Philosophically, this recognizes the we’re-all-in-this-together aspect of professional sports leagues, one of the more curious economic constructs in history. It’s not a coincidence that the most successful North American sports league also has the most rational approach to revenue sharing. Some 60% of the NFL’s $11 billion revenue pie is shared, which is why tiny Green Bay, Wisconsin can compete with big bad New York or Chicago. The other two Big Three leagues aren’t quite as egalitarian but have improved their models in recent years: MLB teams share nearly a third of local TV revenue, while NBA teams reportedly approach a 50% total revenue share (give or take a few complex calculations).

The NHL, meanwhile, has been sharing 4.5% of its $3.3 billion revenue (with not much more on the table in current talks.)

So greed is the issue, alright: owners’ greed, specifically owners in larger markets who refuse to recognize that sports leagues are in many ways socialist enterprises, in which the needs of the many fat cats should outweigh the few obese cats. At least if the obese cats want to keep purring.

Again: NHL owners with struggling teams, to the extent that they are actually struggling, are largely in the shape they’re in because of their fellow owners, not because of NHL players.

And all NHL owners would be wise to recognize their own culpability ASAP, rather than engaging in more legal maneuvering. (At the moment, the league is busy filing lawsuits and complaints, while the NHLPA is trying to decertify itself, so players can sue owners for anti-trust violations.) The urgency is not because NHL fans will give up on the sport; hockey fans are absolute gluttons for abuse and incredibly desperate to watch pro hockey. (Seriously, check this out.) No, NHL owners should get their act together because their league faces something none of the other major sports do: Russia’s KHL, an aggressive and surly rival league that has long resented how many European players in general and Russians in particular choose to play in North America rather than staying on their home continent. The KHL’s finances, like most things Russian, are a little murky, so it’s hard to know if the league could seriously compete with the NHL for top talent in the long run. But a surprisingly large number of iced NHLers are now playing in the KHL while they wait out the lockout, including a lot of North Americans.

You have to worry that at some point many will simply decide to stay for the long haul.

Gary Belsky, former editor in chief of ESPN The Magazine and ESPNInsider.com, is a bestselling author and media consultant who lectures on sales psychology, behavioral economics and decision making to businesses and consumer groups around the world.

Belsky's latest book is Why Smart People Make Big Money Mistakes—And How To Correct Them: Lessons from the Life-Changing Science of Behavioral Economics.

I would like to know where you get your numbers? Explain to me where you get the number for team value, does this include all team assets or is this a figure if put up for sale? I can't make any sense of what you wrote in this article and I would imagine if the people at Time knew anything about hockey you would be looking for another job.

I agree, let's contract the league. Eliminate 4 teams, that's 100 less players in the league. Eliminate 8 teams, that's 200 less players. Once this happens, the NHLPA will have done a great job of representing their constituency ... they will just be doing it for fewer players.

Wow, just wow...a lot of blaming the players for taking what the owners are willing to pay them here.

The owners can't police themselves and some of you blame the players?

As others have said...if the league wants to expand into non traditional markets...those owners are going to take some serious lumps. If those owners want to change the system, do it amongst ownership. Trying to put this on the players is ridiculous. The weak market teams either need to suck it up and try to weather the storm...or a better profit sharing model needs to be put in place that makes the entire league stronger.

Squeezing the players is a very short sighted strategy...it does nothing to strengthen the league. All it does is inject short term cash into the "poor" owners pockets while further padding the pockets of the fat cats at the top.

This is a battle behind the scenes amongst ownership that the players happen to be caught up in.

@GoldenJet It's ridiculous anyone is short-sighted enough to side with the players anymore. I don't think anyone who has all the facts behind this lockout is really trying to divert all of the blame from the owners.

Of course they have made mistakes handing out these contracts. Of course they need to share more of the overall revenue. Of course franchises like Phoenix are a failure. The owners need to own up to their mistakes, but they also need to run a business. At this point, it is about fixing their mistakes (mistakes that absolutely should have been fixed in the last CBA).

Forget this record breaking revenue nonsense. By all accounts profits have barely increased, if at all. Costs need to be cut for this league to be financially viable long term. The players need to make concessions to help this league succeed, a league that has made them all millionaires for playing a game! The players have simply turned into stubborn, overpaid athletes with a sense of entitlement who refuse to give into any owner demands because they have too much pride to do it again.

This lockout should have been settled a long time ago, but the players won't allow it to end.

$3.3bil ain't no chump change. If the owners can't figure out a fair way to divvy that up, they should sell to someone who can.

A league is not a bunch of individual businesses doing business with each other. It's a socialist collective with a lot of money to spread around...the fat cats are apparently telling the skinny cats to get their share from the workers rather than a more reasonable distribution from the start.

@GoldenJet you are right on with all your points. The nhl tried to compete and grow under the baseball model of no salary cap and failed. Under the great expansion years of Bettman's tenure, the owners enjoyed large sums of money per each new franchise admitted. The owners took the money, diluted the talent pool in the process, bid up salaries, and pushed their sport to near financial ruin. Since the owners can't go back to the corrupt original six years (no player power) or the disgraced collusion tenure of Alan Eagleson, the owners should downsize their pool of franchises to a more manageable number and relocate as many struggling teams to Canadian markets.

There is a socialist component to it because the teams need each other to succeed, but they are individual businesses with a profit motive. I also find it pretty tough to call the players "skinny cats."

The point is, I hated the owners at first, but they have made enough concessions at this point to get a deal done. The players on the other hand refuse to get anything less than their version of a perfect deal because they are too stubborn, greedy, and arrogant after the last lockout.

The numbers are awfully, awfully misleading. The NFL raked in nearly a billion dollars in PROFIT, while the NBA earned over $200 million. The NHL doesn't even come close to that - they only had $30 million in profit. Of course in the first two leagues, the rich kids will be far more willing to share the wealth simply because there's so much money going around after paying the bills. That isn't the case at all with the NHL. If anything, the fact that the NHL owners share such a small share of the revenues is a hint that costs are running wild - and of course, the players' wages are far and away the main driver of costs.

What a pile of crap. It's sad, really, that people get paid for canards like this. "The real problem in hockey is not in the locker room, but in the owners’ suites and commissioner’s office." -- Wrong. The average player salary over the last CBA went from about $1.45 million to about $2.45 million. Not bad. And that's real, guaranteed (as opposed to NFL contracts) money -- your comment that "the value of their teams continue to rise" may be true, but is certainly irrelevant when it comes to paying the bills, just as an increase in the value of your house doesn't pay your mortgage. Are you really naive enough to believe that "Businesses don’t increase in value if the underlying model isn’t sound" as you wrote?

And "rather than engaging in more legal maneuvering" the NHLPA, not the NHL, should get their act together. After all the NHL's legal actions are a _response_ to the NHLPA's attempt to "bargain" in bad faith. It all started with Don Fehr avoiding bargaining as long as possible -- he's acted in a way as if he's opposed to a deal. Maybe the real goal is to get rid of the salary cap?

Calling the KHL a "rival" league is humorous -- if they were a true rival then more NHL-quality players would play there all the time, instead of just during the lockout. The funniest part? "You have to worry that at some point many will simply decide to stay." HAHAH. Yeah, ask Lupul about the KHL:http://bit.ly/ZhtFHgSeriously, grow up.

@gofa.kjerselvz And league revenues have gone up every single year from the last CBA until this one to a record 3.3 billion. The owners dictate how much the players are worth, they decide how much money to pay them. Salaries going from 1.45 to 2.45 is all on the owners, not the players. Would you say no to someone wanting to give you a million dollars more a year? Of course not. If the salaries were unsustainable then they shouldn't have signed the players to them. Look at this summer before the lockout and the signings that were made. They signed guys to outrageous deals thinking they get to claw them back in the CBA and you are saying the NHLPA is barginning in bad faith? Do you even follow hockey? Don Fehr knows what he's doing. He's made all the right moves and the players, unlike last time, are 100% behind him. During the last lockout, the NHL took the NHLPA into a seedy ally and had their way...and I understood that. The game was broken both on and off the ice but this time? The players have already given a ton, the league has given nothing. It's not a negotation when one side put outs an offer and then continues to give back things from that offer. The players have said they will go to 50-50, they will take less money then their contracts are worth, they will allow contract term limits, they will allow a cap on contract variance (to save the owners/gms from themselves), etc, etc, What has the league given up? The answer is nothingI could write pages on just the lockout alone but I do have an actual job so I'll leave it at that.

@djamesusher "And league revenues have gone up every single year from the last CBA until this one to a record 3.3 billion" -- please look up the difference between revenue and income. "Salaries going from 1.45 to 2.45 is all on the owners, not the players." - correct; the owners, the ones who take the all the risk, grew the business. Despite that, a bunch of teams still lost money. "the players, unlike last time, are 100% behind him" -- they were 100% behind Goodenow or there would not have been a lost season; they would have caved. "they will take less money then their contracts are worth" -- incorrect. Although they are willing to go to 50/50, they want current contract values to remain as-is. Thus the "make whole" provisions. "What has the league given up?" Well, in the last CBA -- money , and lots of it. When the NFL players get 50% of revenues for contracts that are not even guaranteed, the NHL players don't have a lot to complain about. NHL minimum wage going from $175K to $525K over the last deal and 57% of revenues GUARANTEED going to players means the players, despite giving up on the hard cap last time, took the owners to the cleaners. Why else would Fehr stall and not negotiate as long as he did? He wanted one more year at the very favorable terms the players currently enjoy. Please go back to work and let the adults talk, thanks.

This is a great article. I just happened on it and I agree with just about everything Gary Belsky is saying. I said very similar things at jasoncmosley.com. Revenue sharing is what is wrong with the NHL (and the lack of it is what is deterring them from competing with the other three major sports). The fact is that the NHL makes plenty of money. The problem is that only a handful of teams take most of it. But the owners don't want this to be understood, especially those teams that make the most money. So what's the best thing to do? - Pass off the problem as a player salary problem and demand a bigger chunk of the revenue - again! How ridiculous.

Like the saying goes, "you are only as strong as your weakest link", and in the case of the NHL, there are several weak links (or franchises) in the NHL. Mr. Bettman's attempt to grow television revenues by relocating or expanding into non traditional areas has failed. Winnipeg is once again on the NHL map, and soon hopefully Quebec will be too. Unfortunately, hockey is regional and geographical sport, but that does not mean the sport cannot grow In these "non traditional" areas; however, the league must help underwrite these markets by sharing revenue. The underlying problem in the nhl is the economic system that governs the league- the haves vs. the have nots. With no revenue sharing, a cheat-able salary cap, little to no gaming interest (as compared to football and basketball), a paltry tv contract (see gaming), and three work stoppages under Bettmen's tenure, it's a miracle the nhl has had the recent successes it has had over the last 10 years. Unless the NHL wants to continue its current path between CBA's of one step forward and two steps back, they should use the NFL economic model.

Gary, while I respect your opinions related to the economic factors regarding this lockout, I have to respectfully disagree with you due to your lack of knowledge on hockey and the core reason for contempt between the owners and the players.

Yes the owners fix their books for tax write-offs and yes the revenue sharing is a major issue in this league, but the NHL is not the NFL, the MLB, or the NBA. Never has been, never will be. As a die hard hockey fan, I am not a fan of Gary Bettman largely because he is not a "hockey guy", but I do respect what he has done for the league financially.

This lockout is not about where the league stands now. It is about where it is headed. As Bettman pointed out in the NHL's recent press conference, since the past lockout, 6-year contracts in the NHL have grown from one such existing contract to over 90. Average player salaries have soared from $1.5 million in 2005 to over $2.4 million. The year Bettman took over, the league expanded from 24 to 26 teams; it now has 30, resulting in roughly 138 new NHL jobs for the PA (that's 20% of all NHL jobs). Yes, blame the owners for handing these contracts out in the first place, but don't condemn them for trying to fix the issue now.

The owners have an economic stake in this league and whether you think they are doing it for the benefit of the game of hockey or not, they want the league to be profitable. In the end, that will always work out in the fans favor. The players have no concept of the economics behind this lockout, they are very simply rejecting the NHL's offers because they don't want to give back to the owners again after they did so eight years ago. What they fail to accept is that this is a new lockout with completely new issues and no precedent. This article only begins to touch on the real issues, and blaming the owners at this point in the lockout is nothing short of ignorant.

I couldn't disagree more. I think the author nailed it, and provided a good
bit of numbers to back a lot of points. And the NHL has grown and grown and
grown over the years, with the overall revenue going up while the players share
has trackably gone down. This means the owners have gotten more yearly, their
worth is way up, and the new 10 year major network deal even gives them more
projected stability. Oh, and he didn't even get into the LLC's many owners
set up to draw merchandising and arena profits but keep them off the team books,
which have also been booming as of late.

Fehr was not here before this lockout, and yet the NHL led all major sports
in lost games. Bettman needs to own that albatross. There are cities that have
no business with a team they neither support, nor can afford. Again, Bettmans
expansion points. I will not say he has not presided over record growth,
because, as I stated earlier, the NHL and its owners have enjoyed that under
Bettman. But several cities are failed experiments, and changes need to be
made. Or ways to boost their coffers from league revenue should be looked at. A
two team league will not work. They require those other teams to compete in
order to profit themselves.

I've followed hockey since '79. I've loved class after class of hockey
players. I barely know any owners name. Admittedly, I would side with the
players 9 times of out ten, as they are why I tune in. But that said, after
watching Bettman lock them out already in the past decade, get a deal, then lock
them again right after, all while hockey was booming, I think the owners really
are at fault here, and had little interest in negotiating, and instead, intended
to strong arm the players from the jump.

@MartinBlank@EJohnson22 I get that it may be hard to side with the owners at first. After all, they got themselves into this mess (or Bettman did, but he is their responsibility anyway).

The point I'm trying to make is the NHL is not some superpower league that can afford to increase player revenues by 60% every 7 or 8 years. Sure, be angry at the owners for the mistakes they've made because I am too. But I can not support a bunch of greedy millionaire athletes who got rich off of a league and now can't accept that they are overpaid and franchises really are struggling.

Whether you agree with Bettman and the owners or not, and whether you even think they are ethical or not, the reason these players can even make the kind of money they do is because of Bettman and how he has grown the league.

The players need to cut their losses, swallow their pride and remember that they are millionaires who play a game. The owners may have started this lockout but the PA is allowing it to continue, while both sides disregard the communities and employees who are actually affected by their greed.

@EJohnson22 The players are being generous helping the owners pay for contracts they signed but can't afford. The owners that are doing well can more than afford to contribute more. After all they are the pnes who hired Bettman and went along with his schemes to grow the league

This is the kind of superficial piece that someone who hasn't really thought through what he is writing about turns in. We can only assume that Mr. Belsky had no ideas and was on deadline. Contrary to what Mr. Belsky says, the big problem with the NHL IS that salaries are out of proportion with revenues. The best indication? This year the NHL cap (based on the old CBA) and the NBA soft cap values were set to be almost identical. Problem: The NBA has 50% more revenue than the NHL ($5 billion per year vs $3.3 billion). Other sports get most shared revenue from league sources like TV contracts and a little from things like luxury taxes. It's no wonder then that leagues with TV contracts that dwarf the NHL's share a lot more revenue. because the teams can "share more" without teams having to sacrifice money earned by being good businessmen, something no league would agree to.

This is an awful piece. The worst of it is the nonsense about "non-hockey" locales having teams. The Washington Capitals were derided for years by "experts" like Belsky as being a non-hockey town and have been sold out every game for several seasons. Cups and deep playoff runs drive attendance. Take a look at the Islanders attendance compared to Tampa Bay. Furthermore, Mr. Belsky needs to look at the number of draft picks coming from the western and southern states after the Stanley Cup went to Texas California (twice) North Carolina, and Florida.

About the Southwest, i live in Tempe Az and dont drive because you can get a DUI here for .001. I absolutely would buy a pair of medium range seats but siimply cannot get home when the games end. The latest proposal for lightrail is extending east into Mesa where those homeowners drive top shelf cars. The problems with the lack of butts in the seats is not because of non interest.....We simply CANT GET THERE AND BACK. You can only imagine the hoodlum lowlife areas a fan has to travel from Tempe to Glendale and its a 4 hour trip which ends at 11pm. Im not going to add hotel costs to my tix price even if my women date was willing .....so solve the transpo problem from Tempe to Glendale and i know for fact the Coyotes will sell out every game.

Wealth distribution probelm: I had no idea where to put a hockey team, so I stuck four of them in deserts and got lucky San Jose loves doing weird stuff. Now their losing money, and I'm too stupid to move the teams out of the desert to places that ACTUALLY WANT THEM.

Good article but boy does it raise questions! Why are the Rangers so valuable and the Islanders not if all NHL economics are driven by market size? How do you explain Edmonton dominating in the 1980's? Is the answer transfer payments or an examination of the issues that prevent a national TV deal (say: fighting)? Does the NHL have to stop thinking it is the NFL and agree on a long-term win-win-win (players-owners-fans) strategy that really works? Lots of people can explain the problem but I have not seen anybody propose a solution that: 1. ensures every club has a shot at winning; 2. that makes buying and owning a franchise attractive, 3. creates an economic incentive for top players to choose hockey and not baseball or football. What does that strategy look like? What would need to change to get from here to there?

@RickBolin The Rangers are an original 6 team. They have been there since the start and grew a large fan base out of that. While the Islanders had their hay-day with multiple cups in short order, they never got ingrained into that sports landscape like the Rangers have. It didn't help that they play in the worst building in pro-sports and have been sub-par for at least a decade. Very few teams can be that bad for that long and still draw fans (Canadian hockey is different). Edmonton was dominate in the 80's because they drafted well and were a hold over from the WHL which brought the greatest player of all time into the league. They didn't have the money but unlike most other sports, drafting well can win you the cup in a few years. Not getting into the fighting debate here but will say if you want fighting out, you have never and will never understand hockey. Right now, every single club does have a shot at winning. The NHL has the most parity in all of sports. The last 10 winners have been Detroit, NJ, Tampa, Carolina, Anaheim, Detroit, Pittsburgh, Chicago, Boston, LA. In 10 years, 9 different teams have won the cup. Even Phoenix who is now owned by the NHL and gets 10fans a game was a contender last year with a salary near the cap floor. The hard cap and hard floor that the NHL put in during the last CBA is what made this parity possible. I could write pages and pages on the NHL, the NHLPA, it's problems and solutions but I have another job. All I will say is that the NHL is a different beast than any other pro-sports league, always has been and always will be. During the last lockout, I was on the owners side. The game was broken both on and off the ice but this time? I am on the players side. They gave up everything last time, the league grew like it never has before and now the owners are asking for more from a system they designed and wanted last time. TOO BAD.

@djamesusher@RickBolin The NY American's are Msg's original team and the Rags stole that fan base and their building. The oldest and worst NHL building is the oldest and that would be the Cablevision Garden getting taxpayer money or they would not be renovating to keep that exemption who play in front of thousands of empty seats and have for many long periods in their history.

@RickBolin People makes claims based on Forbes who have no teams books with drama queen Ozanian plus Forbes is in NYC and needs Msg given Forbes magazine's big financial problems so they ignore the 11m NYC taxpayers give Msg since 1982 or the Rangers losing 25-30m for several years entering last lockout.

This writer does know there was never any revenue sharing before the last lockout and the Rangers, Hawks, Pens, Caps, Wings all have long periods of losing huge amounts of money in their history with most of the other teams. What the writer does not get is the corporate teams will take the red ink for spending advantages which drives up the market and is the real problem.

I'll tell ya, I got about three paragraphs into the story when I realized I did not care why there is a lockout. At least I did not want to read of any more fingerpointing, which is what the article entailed. This is not to say that I do not find the lockout intriguing in its own sad way. I can only say that I am grateful that I am not one of the lockerouters, or the lockedout. I am also grateful that I am not affiliated with the NHL in any private business venture such as a rinkside restaurant owner or a concessionaire. I'm just a goofball who clicks onto these NHL lockout stories and shakes my head in wonder.

Yes. It's all a lie. Teams going bankrupt is fraud and former player becoming owner as the highest creditor is also fallacy. right. When Time goes bankrupt, will you say the same from the unemployment line.